Research In Motion saw its profit in the second quarter fall by more than half as Apple and Google continue to eat its lunch.

No one was particularly bullish about how well the PlayBook was going to do in the second quarter, but it did even worse than expected.
RIM

The BlackBerry smartphone manufacturer reported quarterly earnings today of $329 million, or 63 cents a share, compared with a year-ago profit of $797 million, or $1.46 a share. Excluding one-time items, the company posted earnings of $419 million, or 80 cents a share. Revenue fell 9 percent to $4.2 billion.

Analysts, on average, forecast earnings of 88 cents a share and revenue of $4.47 billion, according to Thomson Reuters.

The weaker results are emblematic of a broader shift in the smartphone market away from RIM's once dominant hold to the newer powers. The company had gone a year without new products and largely relied on its existing corporate contracts and continued demand from its overseas market to offset the declines in North America. Due to the uncertainty, the stock has tumbled nearly 60 percent over the past few months.

Another source of weakness: the PlayBook tablet. The company put a bulk of its resources toward the product, which looks like it has completely fizzled. RIM said it shipped 200,000 tablets in the period, or less than half of the already lowered estimate of 490,000.

The figure, however, only represents how many PlayBooks were sent to its distributors and retail partners and doesn't accurately reflect how many were snapped up by consumers. RIM doesn't disclose that number, known as the sellthrough rate.

RIM banked a lot of its hopes on the success of the PlayBook and its QNX platform. But critics said it was rushed to market and felt half-baked. The lack of native e-mail and calendar--traditional strengths of a BlackBerry--was a glaring hole for the product.

RIM recently released a new wave of BlackBerrys--led by the well-received, but pricey Bold--but they hit the market toward the tail-end of the second quarter and aren't materially significant to these results. A true gauge of the new BlackBerrys' success will come in the next period.

RIM shipped 10.6 million smartphones in the quarter, also below expectations. Its subscriber base also grew 40 percent over a year ago to exceed 70 million users.

Things aren't looking better for a while. RIM warned it expects earnings for the full year to be at the low end of its previously projected range of $5.25 to $6 a share. In its first-quarter report in June, the company cut that forecast and said it would layoff workers.

RIM has been attempting to fight back against the perception that its aging operating system can no longer compete with the likes of Apple's iOS or Google's Android. In North America, the company has seen its market share slip as more consumers opt for devices based on the newer and flashier platform. Its core customer base, large corporations with an army of white-collar workers, have been increasingly letting its employees bring in their own phones over the usual company-issued BlackBerrys.

RIM is leaning on its QNX platform, which powers the PlayBook, to breathe new life into its phones, but the first QNX-powered BlackBerry isn't expected to hit the market until next year.

But Walkley said he wasn't sure the small QNX team at RIM could stand up to the larger engineering teams at Google, Microsoft, and Apple, who are all pushing their own platforms for both the tablets and smartphones. Still, he doesn't believe RIM will give up on the PlayBook despite the weak start.

"It's too important for RIM to give up on the market," he said.

Updated at 1:57 p.m. PT: to include additional background and analyst comment.